PRODUCTIVITY COCEPT AND DEFINATIONS

INTRODUCTION
The task of a manager of an apparel manufacturing firm, in the new millennium, has become quite challenging. The growing international competition has put a lot of pressure on the apparel manufacturers to produce quality products at competitive prices and deliver them to the customer just-in-time. In this scenario, managers of apparel firms need to lead the factories to the path of continuous improvement. This improvement also needs to be measured continually, so as to understand how much improvement has taken place. Productivity data could be a useful indicator of the improvement rate and the level of performance of the factory. Though factory managers are aware of the importance of productivity, data on productivity is rarely available. Managers, sometimes, feel that collection of productivity data, its measurement and generation of reports is simply extra paper work. As most managers in apparel factories are busy fire fighting, they seldom have time for so-called 'paper work'. The managers and their supervisory team often have misconceptions about productivity and lack the knowledge of the true dimension of the benefit they can derive from productivity measurement, and subsequently the productivity improvement. What is Productivity? Productivity, in simple words, is the relationship between output and input. The output in garment factories can be pieces of finished garments. The output of sections or departments within the garment factories could be: meters of the fabric inspected in fabric inspection section, cut components in cutting room, number of garments ironed in the ironing section and so on. The examples of input are: man-hours, machine hours, meters of fabric consumed or electricity consumed. Productivity can be calculated as: Output Productivity = Input In simple words, productivity is concerned with the efficient utilization of resources (inputs) in producing goods (output). Quite often productivity is expressed in terms of efficiency. For example if the standard expected output per operator is 25 pieces of jeans per shift and the operator productivity is of 20 jeans per day, the productivity in terms of efficiency becomes 20/25 = 80%. This expression may also be called 'productive efficiency'.

Partial productivity is the ratio of output to one class of input. For example, labour productivity (the ratio of output to labour input) is a partial measure. Similarly, material productivity (the ratio of output to material input) and machine productivity (the ratio of output to machine input) are examples of partial productivity. Total productivity is the ratio of total output to the sum of all input factors. It is a kind of a higher level of productivity assessment combining several or many partial productivity measures Apparel Manufacturers, internationally, prefer to use partial productivity measures like labour or machine productivity. This is mainly because of the fact that data needed for the partial productivity measurement is easily available and the results of productivity computation can be used by the department or the section in-charge to evaluate its performance or to plan improvement. In an incentive based payment environment the amount of time the operators are able to do the task they are trained for in an unhindered fashion can be called hours on standard or on incentive. For some proportion of time during the work shift, the operators may not be able to work on their assigned task with full efficiency due to various reason like machine delays, waiting for work, repairs or doing an operation one is not fully trained in, etc. This time is called off incentive or off standard time. The performance level of operators drops during off incentive time, as they only earn a fixed hourly rate without incentive.

Measurement of OUTPUT and INPUT

With respect to measuring inputs, labour input is generally measured in physical units like minutes, hours, days or months. Capital inputs like machines can also be measured in terms of time. In the apparel industry, it is often seen that productivity is communicated in terms of number of garments produced per sewing machine per shift or per operator per shift. Inputs like labour, capital and energy can also be measured in financial terms. As output and input are primary constituents of productivity, it is essential that while communicating productivity, the output and inputs are explained clearly. It is often seen that productivity communication is incomplete. In the apparel industry, it is common to hear statements like, 'productivity of a factory is 15 pieces per operator'. A statement like this cannot be understood or the listener cannot make any useful judgment on the productivity performance as the information provided is insufficient.

It is vital to provide the following information in productivity communication: utput

A better and easy method of communication can be to state that the productivity of organisation xyz is 15 standard shirts per sewing operator per eight hour shift. Manufacturers producing a standard product (five pocket jeans or dress shirt) can use the physical unit method for measuring output, i.e. the output is measured in terms of number of items (garments) produced. In case of manufacturers producing closely similar products, the output is converted into 'standard equivalent product' for physical measurement. For example, if a manufacturer produces three styles of shirts, each involving direct labour content of 16, 20 and 24 minutes respectively and the shirt style taking 20 minutes is a standard shirt, then the output of shirts with work content of 16 and 24 minutes will be multiplied by 0.8 and 1.2 respectively to arrive at the output in standard shirt equivalent In the case of manufacturers with great amount of product variation, the measurement of output in physical unit terms may not be useful, as the products are not comparable. In such cases, the output is measured in financial terms.

Example of Productivity Calculation

The calculation of productivity in apparel industry is further explained by the following example of a shirt manufacturing factory. The data on the output and various inputs is shown in Table-1. TABLE-1, PRODUCTIVITY CALCULATION : DATA ON OUTPUT / INPUT Number of Machines Number of Operators Number of Helpers Number of Checkers Number of Supervisor Duration of work shift Product Swen Standard Allowed Minuites of Shirt (Sewing) Average Daily Outputs Value of Shirt Produced 105 100 20 10 3 450 minuites Mens full sleeve shirt 16.59 Minuites 2000 Shirts Rs 300.00

Interpretation of Productivity Data

Having discussed what productivity is and how to measure it, it is equally important to understand how to interpret and analyse the productivity data. Many a times, productivity communication can lead to wrong interpretations or conclusions. For example, lets assume that the labour productivity of a T-shirt manufacturing unit is only 50% (225 standard minutes produced per 450 minutes consumed per operator). It may seem that the productivity of the operators of the plant is only 50%. But, it is not necessary that it is only the operators who are at fault. Actually, this productivity performance could be reflective of the collective impact of various inputs like labour, machine, supervision, raw material, power, etc. Productivity data, if not fully analysed, may lead to costly mistakes. It is also possible that people may wrongly use the productivity data for their personal or departmental gain. These problems arise when productivity measurement is not an organisation-wide activity. For example, the in-charge of cutting department may not carry out a few important tasks like notching or drill holes in the cut components This may give an impression of increased productivity in terms of number of garments cut per worker or per machine. However, such an act will reduce the productivity of the sewing department, as the operators will take more time to sew due to incomplete cutting. Another example could be that by using a highly skilled (high wage) sewing operators for a particular job, the labour productivity measured in physical units produced per shift may go up. But when the input of labour is measured in relation to the cost of labour in place of the time of labour inputs, the story may be quite different.

Levels of Productivity Measurement

It is important to understand which productivity measure to use at a particular level of productivity measurement in an organisation. Productivity measurement can be done at macro as well as micro level. Figure-1 explains various levels of possible productivity measurement in the apparel industry. Organisations with the presence of productivity measurement system do undertake regular productivity measurements, starting from the plant level up to the operator/ staff/ machine level. It must be noted that, depending on the prevalent situation in the organisation in terms of relative importance, different productivity measures may be favoured. Manufacturers in the developed world may give more importance to labour productivity over machine productivity, whereas in a developing country with lower wage cost, machine productivity may gain much more prominence.

How is Productivity Lost?

When one hears a statement that labour productivity of a factory is only 50% or 60%, it comes as a shock. However, it is important to know that the 50% or 40% performance that is lost, is contributed by various factors that individually may seem quite insignificant. However, their collective impact can be disastrous for the productivity performance of a manufacturer. The factors that could cause productivity losses and their assumed occurrence level are given in Table. A factory with one hundred workers can have 4000 standard hours of productive time a week at the rate of 40 hours x 100 workers. When all the factors mentioned above are applied, the total output lost comes to 1960 hours, which makes it 49% of the potential. It is important to understand these factors and control them so that productivity is not lost to such a level. The top management of an apparel factory, if so desired, can make or break productivity performance. It is often seen that productivity performance of factories producing the same garments is substantially different.

The Benefits of Higher Productivity.

Higher productivity can provide the economy with a number of advantages over time 1. Lower average costs: Improvements in labour and capital productivity allow businesses to produce output at a lower average cost. These cost savings might be passed onto consumers in the form of lower prices, encouraging an expansion of demand, higher output and possibly an increase in employment. 2. Improved competitiveness in international markets: Productivity growth and lower unit costs are key determinants of the competitiveness of British firms in domestic and overseas markets. From improved productivity, businesses can develop a competitive advantage in markets where there is intense price and non-price competition from overseas suppliers. 3. Higher profits: Efficiency gains resulting in rising productivity are a source of larger profits for companies which might be re-invested to support the long term growth of the business 4. Higher real wages: In the long run there is a positive relationship between improvements in labour productivity and the real wages paid to labour as a factor of

production. Put simply, businesses are better able to afford higher wages when their labour force is more efficient 5. Economic growth: Our capacity to produce goods and services depends on the stock of factor resources available plus the productivity of those factors. If the British economy can raise the rate of growth of productivity then the trend growth of national output can pick up. This has implications for living standards, unemployment and tax revenues and government spending in future years

Factors Contributing to production improvement

Increasing employee productivity is a key component in growing company revenue. Management can take several steps to help increase productivity for the long-term. When a company takes the time to understand and implement the factors that improve productivity in the workplace, it is making a positive investment in the organization's future. Proactive Employees A productive workforce is one that understands their jobs and is given the freedom to reach their goals. Micro-managing employees can decrease productivity. By offering comprehensive training and an efficient monitoring system in place, employees can learn to be more proactive in the execution of their duties. When management is not standing in the way of employees, then the employees are better able to do their jobs. Positive Management In the workplace, a positive attitude breeds increased productivity. According to the American Management Association, a management team that maintains a positive approach and reinforces positive behavior will get positive results. Spend time emphasizing employee accomplishments by recognizing them in public. Employees will begin to associate a strong work ethic with being recognized for positive results. This will increase productivity. It also reduces the need to dwell on negative performance aspects. When employees see the benefits of productive work, they tend to want to emulate that rather than experiment with the possibility of negative results.

Encourage Communication One of the things that can slow productivity is when a mistake is made, but that mistake is not communicated to the responsible parties. If the mistake is not brought to management's attention, it will keep on being made. When the mistake is finally caught, all of the work that was done incorrectly will need to be re-done. Encourage open communication within the company to help increase productivity. Reward employees for vigilance in reporting potential problems. Rewards can be simple things, such as an extended lunch hour. Make sure employees and management have an open line of communication to help reduce errors and increase productivity. Communication between the managers of various departments is also critical in maintaining positive results Dos

It is a must for every apparel producer in India to start measuring productivity on a

continuous basis.

Productivity must be measured at various levels starting from operator/ machine level,
going up to plant level.

Measure productivity in physical as well as value terms against all the quantifiable inputs. Monitor productivity performance to track improvement over a period of time. Do not accept
claims of people with out clearly spelt out evidence on productivity improvement. Donts Ignore productivity measurement as unnecessary paperwork. Assume your team understands what productivity is, its true importance and the amount of value productivity improvement can add to your organisation. Leave productivity improvement initiatives to your people thinking that it is common sense. You would need to show commitment to productivity improvement and lead the team; after all 'Common-sense is not common' and you cannot run away from your responsibility of leading by example.